Q2 2025 Paycom Software Inc Earnings Call
Good afternoon. My name is Tamia and I will be your conference operator. Today at this time I would like to welcome everyone to pay comm's second quarter, 2025 Financial results conference call all lines have been muted on have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press the star key, followed by the number 2 on your telephone keypad. Thank you. I will now turn the call over to James Sanford head of investor relations. You may begin
Thank you and welcome to. Pay comps earnings conference call for the second quarter of 2025,
Certain statements made on this call that are not historical facts including those related to our future plans, objectives and expected performance, our forward-looking statements within the meaning of the private Securities. Litigation Reform, Act of 1995
These forward-looking statements represent, our Outlook only as of the date of this conference call.
While we believe any forward-looking statements made on this call are reasonable. Actual results, May differ materially because the statements are based on our current expectations and subject to risks and uncertainties.
These risks and uncertainties are discussed in our filings with the SEC, including our most recent annual report on form 10K.
You should refer to and consider these factors when relying on such forward-looking information.
Any forward-looking statement made speaks only as of the date on which it is made and we do not undertake an expressly disclaimed any obligation to update or alter, our forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
Also during today's call, we will refer to certain non-gaap Financial measures including adjusted Eva de non-gaap net income and certain adjusted expenses.
We use these non-gaap Financial measures to review and assess our performance and for planning purposes.
A Reconciliation schedule showing gaap versus non-gaap. Results is included. In the press release that we issued after the close of the market today and is available on our website at investors.pershing.com.
I will now turn the call over to Chad Richardson paycom CEO and president Chad.
Thanks, James. And thank you to everyone joining our call today. I'll focus my comments on our second quarter achievements and highlight our latest AI command-driven product.
I'll then turn it over to Bob for a review of our second quarter results and an update on our full year guidance. We will then take questions.
Margin expansion in 2025.
Outside sales continues to set records, then we recently released, I want the most significant product in our company's history.
We already have the most automated solution in the industry and I want delivers even more value to our clients through Ai and automation.
I want will transform a client's relationship with paycom and with its own business.
Hopefully everyone has seen the I want demo. We linked into today's earnings press release issued at the close of the market. If you did, you saw numerous use cases for I want on the employee manager, administrator and executive side of the software. You also saw how I want eliminates the need for a paycom user to be trained on our software.
With I want's command-driven AI users either type in or leverage voice activated functionality to command immediately, provide the answer with accurate results. This means that navigation and asking others for system. Information is rendered obsolete.
A critical component of AI is the data, it pulls from and because I want pulls from paycom single database, it eliminates problems created by inconsistent or duplicative data sets.
On the manager side, I want supports HR teams and organization Leaders with instant employee information. For example, a manager can use. I want to pull data on when an employee returns from vacation, see who's clocked in for the day or analyze and employees pay history. These are just a few examples of the power of I want.
Before I want Executives, like myself were dependent upon others to complete reports and provide critical decision-making information today. And I once executive mode Executives using paycom, now have the information, they need at their fingertips, enabling them to be daily users of our solution without ever having to be trained on the system. Just tell it what you want, and I want delivers making Executives even smarter and more effective.
Now, I can quickly find any information about my staff available in our single database because we track the entire employee life, cycle and have data from applicant tracking onboarding paycom learning expenses, benefits, time and attendance, payroll schedules, surveys and more, all accessible through i1, early feedback, has been phenomenal. With clients calling this, a total game changer.
I once command-driven AI engine will increase usage among non-daily users in our system. And I fully expect. I want to increase satisfaction and client Roi.
Voice, activated command-driven functionality is the future for all software and paycom future started last week.
We invest in Innovation to increase client value and this is fueling strong sales for paycom. Our sales teams. Continue to set new records every quarter and I'm very pleased with their strong execution. Our sales force was recently recognized by selling power magazine as 1 of the best sales organizations in the country. This is a testament to our sales leadership training and culture.
Finally Time Magazine listed paycom amongst its best companies for a second consecutive year, Newsweek placed paycom in the top 20 of their inaugural ranking of America's best online platforms and comparably recognize paycom for best career growth and best leadership teams. I'd like to thank our employees for their hard work and commitment that are reflected in these Awards.
We had very strong results in the first half and we are set up for continued, strong momentum for the rest of 2025 and Beyond with that. Let me turn it over to Bob.
Thank you, Chad before I review our second quarter, 2025 results, and our commentary for the remainder of 2025.
I'd like to remind everyone that my comments related to certain Financial measures will be on a non-gaap basis.
We delivered very strong second quarter results.
Total revenue of 484 million increased 11% over the comparable prior year period.
with even faster growth and recurring and other revenue of 12%, year-over-year reaching 455 million
Interest on funds out for clients declined, 11% year-over-year, as expected to approximately 28 million in the second quarter of 2025.
I'm in the quarter was 89 million or 1.58 cents per diluted, share based on 56.5 million shares.
Non-gaap net income for the second quarter, increased 27% year-over-year to 117 million or 2 dollars per diluted share.
Profitability and the second quarter also increased significantly with adjusted Eva of 198 million, reflecting a 24% increase over the prior year period.
Adjusted ebit down, margin was 41%.
Representing a 450 basis. Point increase over the prior year period.
Margin strength in the quarter was driven by Revenue, upside efficiency gains in GNA and timing of marketing spend.
We continue to invest in the areas of AI product and R&D. And as Chad mentioned, last week, we introduced our most Innovative development to date. I want
based on the strength of the first half of 2025, I am pleased to report that paycom is in a very strong financial position. And we are raising our revenue and adjusted ebit dot targets for the year.
Our balance sheet is also very strong. We ended the second quarter with cash and cash equivalents of 532 million and no debt.
The average daily balance on funds held for clients was approximately 2.6 billion and the second quarter of 2025 up, 10% over the prior year period.
During the second quarter of 2025, we paid approximately $22 million in cash dividends.
Earlier this week, the board of approved, our quarterly dividend of 37 and a half cents per share.
Payable in mid September.
We also purchased roughly 33 million of common stock through net Downs on vested stock during the second quarter of 2025.
And we still have 1.44 billion dollars remaining under our stock repurchase plan.
Now, let me turn to guidance for 2025.
We continue to have success selling an onboarding new logos.
Based on our strong first half results, and our outlook for the remainder of the year.
we are raising our full year revenue and adjusted Eva dog, guidance, ranges,
We now expect total revenue to be between 2 billion, 455 million and 2 billion 555 million up 9% year-over-year at the midpoint of the range.
For the full year 2025, we expect recurring and other Revenue to be up. 10% year-over-year, including quarterly growth of approximately 10 and a half percent, and 11% year-over-year in Q3, and Q4 respectively.
Our Revenue expectation for interest on funds help for clients is now 113 million in 2025.
Down 10% year-over-year. Assuming 2 rate Cuts later this year.
Revenue upside along with continued automation of HCM and payroll manual tasks is driving margin Improvement for payoff.
As a result, we are raising our full year adjusted Evita guidance range to between 800 and 72 million and 882 million.
This represents a second increase to our prior adjusted. Eva down, margin guidance.
To approximately 43% at the midpoint of the range.
We plan to increase our marketing and R&D budgets in the back half of the year in support of the iwant product, launch and additional Innovation focused on AI and automation.
Other forward-looking items include full-year GAAP and non-GAAP tax rates of 27% and 26%, respectively, and stock compensation of approximately 7% of revenues.
We are pleased to see employees across the organization. Executing very well, which is driving our solid performance year today.
Our go-to market and product, strategies are working and we are well positioned to deliver on our raised expectations for the year.
With that, we will open the line for questions. Operator.
Thank you at this time. I would like to remind everyone in order to ask a question. Press Start in the number 1 on your telephone keypad. In the interest of time, we ask that you please limit yourself to 1 question and 1 follow-up. We'll pause for just a moment to compile the Q&A roster.
The first question comes from rainbow linqia with Barkley's, you may proceed.
If I think about, I want. Um, how do we think about that in terms of, you know, driver for the overall business? Is it just like, uh, you know, it's just a differentiation tool and that basically helps you kind of against someone that doesn't have that sort of clean data structure that you guys have. Um, and so then you kind of, you know, sell better and as far as I remember, there's not that many guys out there as clean as you um, or do you think eventually down the road, there will be some monetization offerings as well. And then, once for Bob, if you think about more AI, probably means you need some gpus Etc. Uh, how should we think about gross margin impacts that potentially could come there? Because obviously, they, they need a lot more money and computer. Thank you.
Yeah I'll start um Ramo you know, I want is paycom, you know, voice command driven AI tool and it really just revolutionary revolutionizes how people actually access and navigate a system now. And so think of any piece of software or any system in your life that you have to navigate, imagine just commanding it.
And we found that it makes it easier for the employees. They don't have to learn a system; they can just go in and command what they need or ask what they need. You know, employees don't enroll in benefits all the time.
The certain things in our system that they don't do it all the time. And so there's not a need for them to be experts at it. So on the employee side, it automates, everything. Same thing on the client side. Uh, you know, for me I'm not a daily user in our applicant tracking system. So if I wanted to get a resume, I had to make a phone call. I'm not a daily user and our benefits Administration system. And because I'm not a daily user because I'm not set up as a user. In those systems, I couldn't get access to certain information without contacting people. Well, now I can get access to anything. I just asked I want, it'll go pull someone's resume for me.
It'll pull all their past.
A job, history. Pay history. It'll tell me who's all clocked in right now, who's late for work today. So basically right now I'm a, I'm a, I'm an expert in our system because I'm utilizing the, I want command driven tool, which allows me to interact with our system differently. And so, what's happening is as we've turned this on and activated this for clients more and more users, and executives are actually engaging with the system and it's eliminating the need for them to communicate with others, in their organization or slow down the chain of data moving. And then all that Bob take and then as far as from a monetization process, I mean this is everything.
this is a different way to utilize software, I'm unfamiliar with any other
That has a command-driven navigation throughout their system. And so, I do think this is going to be, you know, a thing for not only our industry but any type of software where users are currently navigating it. So I'll stop that, and let Bob answer the GPU questions. Thank you, Ramo. Yeah, we, um, we see that there'll be a need. So we are going to use... We're expanding margins, as we've talked about, and those we expect to be up several percentage points throughout the rest of the year. And we're going to take that and reinvest that back into CapEx.
Ai and equipment.
And as a result, we do expect free cash flow to be similar to last year.
Thank you. The next question comes from Mark, marcom with beard. You may proceed.
Uh, good afternoon. Thanks for taking my questions and congratulations on the strong quarter.
Chad, um, the product is really slick. I like it. Um, I'm wondering if you can talk a little bit about what the marketing plan is. Um, is it a ready turned on with all of your existing clients? If not, what do they need to do? What's the training? Um, you know, methodology, just in terms of making them all aware of it and how they can use it.
Um and and then how are you going to unfold that in terms of um, you know, National advertising? Um are you going to switch your your, um, your campaign in order to focus on this?
all right, so
July 31st. Uh, We've turned on 10% of our clients so far this week, I would say. By the end of this week, we're at 15 to 20% activated and by turning on, you know, I want doesn't you can still navigate our system if you want to. I mean, you know, you can still navigate it if you want to. Uh,
If if someone wants to keep using the system after I want, the way they used to use it, they can. But once I once there, we found that people don't. And so activation is about turning it on and making sure people understand what I want. Does, you know, if you ask it, where the closest gas station is to your location, you're not going to get a good response, you know? So it's important that people understand how to use i1.
And so, we go through a list of about 20 prompts once we turn people on and they understand it, and then they're Off to the Races. And so, we do expect to be able to activate, uh, all of our clients throughout the remainder of this corn, uh, this quarter. You know, there's not really any lift to the client on this.
This is gets them, easy access. I mean it's almost a reward, it's a reward for our sales reps for all the hard work. They've been doing to get us to this point to reward for our service individuals for all the hard work they've been doing. Now they're calling clients with very positive positive news. It's a reward for these clients that have implemented. These different modules, believe in the single database system and now they get instant access to all of it without having to be trained or what have you. And so, uh, this will be everything for us in the future and, and really, I do see this being the way that every company and I mean, every company.
That has business to business type software even consumer software. I see this is the way it's going because there's just no need to be trained in a software. Uh, you know, now that we have new tools available to us, uh, as far as the, uh,
Training. There's not much to it. And as far as the, uh, National advertising, you know, our we're doing a lot of full solution automation. So I want think of that, as a way that you access it, you know, uh, you still want to be set up on gone. You want to be having decisioning logic, you want to be set up on Betty. And then I want is just how you get to access all that you don't have to become an expert. And so we're really excited about it into the future and uh, you know everything, we develop now, uh, we'll have an I want component. Uh,
To make sure we keep it clean.
Thank you. The next question. Comes from Kevin McVay with UBS, you may proceed.
Great. Thanks so much. Uh, May and my congratulations as well.
I guess, in terms of I want, how are you going to monetize it? Jed? Is it kind of part of kind of a base Pepe? Is it an individual, or is it? You know, just a core core package. You have to adopt based on a certain number of modules, any way to think about just
The, the pricing and and go to market motion on it.
Yeah. So you know, I I was with somebody in the elevator earlier and I wanted to look them up and see how long they've been here and what the resume looked like and their job history and everything at paycom. Well that requires me to have some modules.
So, 1 way that I want, you know, I want to also expose, uh, data that, you know, maybe you have it looked at in a long time.
You're able to see it, but you know, if I'm asking I want, uh, if 1 of our clients is asking, I want for resume information.
You know, or if they ask them for prior work, history information, and they're not on our applicant tracking system.
You know, they're not going to have success pulling that information. And so in 1 way it'll help us is, you know I I do think they'll be more full solution deployments across our client base so that you get access to it. Another way, is we do expect it to increase our sales volume.
Uh it's a revolutionary product, it's easy to use. And I do think it's going to uh, you know, over time impact our retention as these clients become more engaged in the software and get the full value of available to them. I want removes all the impediments to value.
So now you just get it, you didn't have to work for it as much.
And so, uh, you know, we're really excited about what it can do for us on all those fronts.
Thank you. The next question comes from Steve Anders with City. You may proceed
Okay, great. Thanks for. Um, thanks for taking the question here. Um,
I guess just just to start. Uh I just want to understand like what actually maybe was different versus what you were expected coming into the quarter because it looks like the, you know, the upside looks pretty.
Solid versus maybe we've seen in the in the past few quarters. So I guess a what just kind of happened there and then I guess secondly just as we think about, you know, I want. And what that means, is there any implications for what that means for, you know, Betty adoption or
Really need. Um, you know, need to adopt Betty to get the kind of full functionality of of I want
Based on, I would say, our sales organization's been doing a great job and, you know, and so uh, we've had some outperformance there and I think you're seeing some of that here and then as well as you know, in the margin side. I mean, you know, we continue to see efficiency uh, through our full automation goals. Um, you know, and and it does slow our pace of hiring a bit and, and also our willingness to back fill. Uh,
Some open position.
Of the automation. So uh, you know, we're getting some more efficiencies on that too. As far as, uh, Implement implications for Betty adoption, uh, it's not required that you've implemented Betty to get value out of. I want, I do think that, you know, the more of paycom products that you use, which would include Betty. Uh, the greater the value, you're going to get
From it. And the more questions it will answer for you. The more insight, it will give you and so uh, I do think I want makes it easier to use all that additional functionality, but there's not a requirement that someone would have Betty. Although I will say, uh, I believe Betty is a very important product and I still, uh, say that it's the best way to do payroll for employees. And actually, we have a lot of clients that Boomerang back to us, uh, because they uh uh felt it when they left and the need for having accurate payrolls to prevent.
Errors before they become problems.
Thank you. The Following comes from Jason Selena with KeyBank. You may proceed.
Yep. So um,
You know, I admittingly, I looked at the demo, you know, 30 minutes before this and it looks pretty intuitive and helpful. Um, but Chad, I mean, I think you're calling it the biggest release since the company's founding, you know, that's quite, you know, a bold statement, um, but you're obviously not a charging for it. Um, how do you, how do you envision? Um, you know, recognizing the full value? Um, that you're providing here. I hear you on the full platform sales, but you know, what are some other mile markers? We, we can kind of think about
Well, I mean I I just mean what I said it is the biggest. I mean, you know, and, and F-16, is hard to fly. I mean, sometimes you can have a lot of different people that know it, the more you add to it, you know, but we've made it 1 button or a command that now you can fly the whole thing. So that's what I mean is it's our biggest development, I mean we've removed the barriers to value.
You know, the more you add, the more functionality you have in these types of systems and Enterprise type systems, you know it does require uh a level of training for someone to really be able to deploy it. Even some employees require some level of
This removes all of it. And so, you know, it's the biggest, it's the biggest Innovation that we've ever done at our company since its founding, uh, just because of the impact that it has. I mean, you know, I'm actually
I mean, clients are just Overjoyed by it. I mean they're really Overjoyed. You walked the floor here in service and you hear them talking to our clients. I mean they're just they're amazed and it's working very well for them and they and they deserve to have it. So I'm going to really stand by that. Not only is it the biggest development I think by the time we do version 2 and 3 I don't even know what else I could develop after that.
Because we have the full solution automatically.
you know, I'm gonna I'm gonna really stick by that, uh,
And then how we're going to uh, recognize the full value. I think was your uh
Uh, was your other part, you know, is obviously in our go to market, uh, it impacts that. And then again, when you remove barrier to value, that increases, the value that your clients are getting
And so, when you can do that, and they don't have to do that work, we do think that that's going to, uh, create a more meaningful relationships with our clients more meaningful relationships. They have with our system, and we do think that that will, uh, impact retention.
And, and then just a quick follow-up for Bob. You know, the 12% you saw on recurring in the quarter, you know, very impressive here on the, on the back half. Um, you know, the, the slight diesel. But was there anything in second quarter from like a 1-time perspective that that, that or timing related? It's just some trying to understand the, the, um, you know, the beat and then the implied diesel in the second half. Thanks.
Yeah, thanks. Jason know. There wasn't anything on the 1 time D other than the timing of the marketing spend that we've been pretty consistent about and, and, and the first and second quarter. Um, and then obviously, we never know what we can anticipate in the fourth quarter for bonus runs and and Etc.
Thank you.
The next question comes from, Daniel gesture, with BMO, Capital markets, you may proceed.
Hey, good afternoon. Thank you for taking my question. Uh Bob I wanted to go back to a question earlier in the comment you made about free cash flow. I just wanted to uh clarify is that free cash flow dollars or is that free cash flow margin.
And I wanted to see if the contemplated any sort of tax benefits from, uh, the uh, the new, the new tax bill.
Yeah, Daniel. So that was margin of and we are evaluating the BBB now, there will be some, some cash flow benefits on that.
and 2025 and that's built into our, our
Okay, thank you. And then just on the sales and marketing investments, I guess we should anticipate...
You know, this is a very intuitive product but but maybe you want to devote a little more resource back to the base to, to sort of help people out in those initial phases. Um, you know, is that is that where is this? Maybe temporary uh investment that we're going to be able to harvest in 2026 or do you think this is going to be more substantial push? Thank you.
I think you're talking about our sales and marketing spend. As we look into the remainder of the year, you know, we did know, I want was coming out. And so, uh, we have been preparing for that. Spend in third and fourth quarter. Uh, you know, uh, I've always said with marketing, you know, you don't just throw dollars at it, you have to measure it. It's got to be having a return. So we're always cautious on marketing, spend and we measure it, but it's our intent right now to, uh, you know, maximize our budget in the third and fourth quarter for marketing, just because of the opportunity that we have.
Thank you.
The next question comes from Jared, LaVine with TD Cowen, you may proceed.
Thank you. I just wanted to dig in, in terms of Tuki, you had a pretty notable sequential increase in the, um, within capex, specifically on pp&e. And it sounds like you're contemplating pretty, um, healthy spend there as well for the remainder of the year. You can dig into what exactly you're spending there and kind of, when potentially that could taper off.
yeah, I mean
Other than you can, uh, jump in, you know, we've always, uh, developed and hosted, uh, our own platforms. And, uh, you know, as we move into AI, it does require, uh, you know, a certain uh, level of spend
You know, so as we look at that, I do believe it to be more transitory uh in nature. But as we look at that, you know, that's going to be front-end loaded for us right now. And and that's really what we're looking at. And a lot of that's going to be uh you know through capex. I think Bob explained kind of uh we do expect to take the benefit that we're receiving in the additional margin creation right now and put that into uh
Some of these uh capex expenditures. Uh and then we would expect our uh margin for free cash. Flow to be not dissimilar this year to what it was last year. Again, I do believe these spins will be more front, and loaded and transitory
So uh, you know, we'll go from there. I don't know. Bob, if you have anything to add to it, no, the only thing I'll add chat is that you know we see this as a growth opportunity for us and we have we have the capital to take advantage of it right now and that's what we're doing.
Got it and then just 1 more here. Um can you talk about your back to base sales productivity by crrs year to date?
I mean, they're but they've been back in the field so you know, as I've mentioned before, it's kind of a per per territory basis so we did kind of change.
You know, the way that group books and starts deals a while back that I mentioned, uh, and that really became the new normal, but they are having success. They're more successful this year than what they were last year. Uh, and you know, we'll just see how a time works those out. I do think I what's going to help them quite a bit. Uh because again uh in order for you to get the full solution automation, you need to have the full solution and uh, you know there there's no better way to get it than just asking for it.
And that's what I want to help.
Thank you.
The following question comes from Alex Vucan with W. Wolfe Research. You may proceed.
Yeah, hey guys. So maybe on, I want specifically, when you think about how it fits into the overall product strategy, with Betty, maybe help us a little bit where you're getting the most customer interest. What is success look like for? I want and
and I want to cross your customers growing uh it it kind of where is the opportunity for for retention uh in that world to go to
Mention opportunities. I mean, I think they're both the best way to do something.
Uh, you know, but the way to think of I want I mean it just it it it runs through our entire system. So you know, Betty touches multiple modules, I want touches every module and every piece of data in our system, every field everywhere.
So it's it's quite a bit different. Uh you know your users of I want to be everyone.
Uh, your users are Betty. You know, you're going to have the employee at the time when they're doing payroll, and then you have the payroll department and what have you—both significant and very important. But think of it this way: I want a new way to access information. I mean, you could look at this like the way you access your bank, the way you would just talk to it and tell it what you need.
like I can go into I want right now and say, you know, I had a baby need to add him little Adam, I'm going to, I want right now and ask who somebody's spouse or wife is
And it doesn't, I mean, it'll bring it up for me.
So I can ask it anything. If the data is in our system, it's going to respond and give me that data. And so uh,
you know, we're really excited and that's that's really a giant change in our industry. But really any industry where you use software where you're Now voice activated command driven throughout the software.
So they work a little bit different than each other but I once just going to make Betty sweeter, I guess would be a better way to put that.
Thank you.
The following comes from Bob and Shaw with Deutsche Bank. You may proceed.
Great. Thanks for taking my question Chad. You just kind of mentioned earlier that you think the capex will be a little bit more transitory as you build this out and kind of with you owning the entire Tech stack and and once the entire customer base is up and running on I want and and extending usage. Why shouldn't there be more continued to spend, from a capex perspective, as users, kind of use it more and you're kind of running through GPU Cycles
Well, I mean, I think there's a certain amount of spins you have to do.
Starting line, you know, and then I think uh, on on, on an ongoing it becomes more incremental.
uh, but I think as you're looking at rolling out massive usage, you know, like I said, I mean,
We would expect to activate all of our clients this quarter. So, uh,
You know, there's going to be a certain level of first hit as they're using it which we're already seeing and then you know and and subsequent quarters and and years you know, of course we will add to that you know. Also kind of you see it over time the cost of Technology comes down but the cost of power doesn't, you know? Uh, and so there's just different things you have to look at as you go through building these things out and we've Incorporated all of that in our guidance and in our, uh,
you know, on our
And and just I guess just following on that just given how like useful I want looks and and how intuitive it is like why not more directly monetize it on a pep and basis or a usage basis versus kind of indirectly, monetizing it on better sales and and driving attachment on the modules.
I believe that every client should access their data this way. And you know, we've had clients that have been with us a long time and there's no reason to make them pay to get the value that's available for them. Where I really think that this is just going to take off for us.
You know, I really just don't think we need to do that. Plus, I don't want to spend a lot of time having to go out and sell clients and charge them on things that I can really get them to use the full utilization of the system, and I believe that will create other opportunities for us.
Uh both with these clients and definitely with prospects. So you know, uh,
I think we have to be careful to to to stop and pick up the change on the ground. When there's opportunities out there, if we remain disciplined, and really help the clients achieve
The value available to them.
Yeah.
The next question comes from Joshua, Riley with meet him, you may proceed.
All right, thanks for taking my question. I I was just curious, maybe a little different angle and some of the other things we've been talking about, but how are you adjusting your sales and marketing processes? Internally with all the new different AI sales tools that are out there for, uh, front-end lead Automation. And then also along with that, the way that customers find you might be changing as well with Organic uh Google search traffic. Declining kind of on a secular basis over time. How do you kind of square all these items up?
To manage uh sales efficiency over the next few years.
Yeah, I mean I would divide more.
I would say a marketing group's been using those tools efficiently for quite some time and continue, you know, the tools available to them and continue to see uh, more to that. I mean, from a sales process, you know, we might write back to the way we were selling back in 2000. We went right back to that type of training leverage and influence. Uh, uh, when Amy took over and that's been working very well. You know, I've I've, uh, I'd love to think a product sells itself, but that's not true. At the end of the day, you have to have great salespeople, who are out there working with the client to help them understand the value that's going to be created and you have to have a very strong Roi case. So, uh, you know, we're going to continue to sell the way we've been selling. But I would think about this as a, a
Just it it just changes. I mean it's night and day. You know when we rolled this out on July 30th or 23rd to our very first client. I mean it's night and day. Uh how you utilize our system on a go forward from a Simplicity uh standpoint.
And I do think that that's going to weave itself into sales. I mean again, uh and by the way, we turned our first client on July 23rd. I don't even think we gave it to Sales until last Monday, you know. So, um, you know, they're just now a week in maybe at the most to, uh, to actually being able to go out there and talk about it. So we'll kind of see the impact that I want has on the sales organization here, over the coming, quarters and years for sure.
Hi, just a quick follow-up. Uh, is it fair to say that the new sales activity was up, uh, sequentially from Q1 to Q2? And how do you think about that in terms of, uh, visibility for revenue in the second half? Um, and how, you know, the level of visibility that you have into the, uh, updated revenue guidance? Thanks, guys. I mean, what I would say is, you know, we were talking about record sales in the first quarter, and now we've just reported the second quarter, and now we've talked about record sales in the second quarter. So, uh, you know, the obvious...
uh,
those haven't really, uh,
A lot of this hasn't started yet. So, you know, let's say most of us haven't started yet and so, you know, those will be reflected in subsequent quarters and then, you know, we always guide to what we can see. But I would say there's a level, there's a level of excitement across. Hey, come right now. That's, uh, different than it's been in a long time. And, you know, we've always been a pretty exciting company, anyway.
Thank you. The Following comes from the city ponty's, try height with mizuho. You may proceed.
Oh, thanks for taking my question. And Chad, I want to ask about the demand environment, how you seeing, you know, the first time and your expectation for second half and then, are you seeing any kind of changes, uh, you know, and the competitive landscape, especially with all the consolidation that happened recently in your space?
Yeah, I mean I would say our demand uh, environment remains strong. I've always said, we also create demand and remember, we have less than 5% of the total addressable Market, uh, just in the US even. And so, uh, you know, there's many opportunities from a changing, the competitive market. I think they all got a lot less competitive uh, a couple of weeks ago, to be honest with you.
And, and this is going to be a thing. I mean, you guys will kind of see. This will be a thing. Uh,
Moving forward, I mean our client feedback's been really good. I think that, uh, I know competitors will say they have the most automated, the most of this, the most staff. But if you can't talk to it,
It's not the most automated, it's not the most modern.
You know, uh, people might want to drive an old car or motorcycle or fly an old plane. I mean those things are nostalgic and cool, you know, but driving an old HCM system around. It's not cool. It's just sad.
So, you know, I do think that you're going to see a lot of clients gravitate toward this type of experience, because why should they work extra hard?
To get the value, and which is why we created it in the first place.
Great. Thank you.
Thank you. The final question comes from Jake Roberts with William Blair. You may proceed
Yeah, thanks for taking questions. Uh, when you talk about, I want taking off for you, where, where do you think it shows up most? Is that new logos? Is it retention? Is it new product? Adoption? I guess, I guess, what should we be looking for on our end? And when do you think it actually starts showing up more meaningfully in the numbers?
I mean, I think it's going to
Some very bullish on it showing.
Revenue growth. So, you know I would I would definitely expect that to be probably the largest bucket of that. But I will also tell you, I expect to have a huge impact on our retention over time as people are using it and becoming more acclimated to it. And I also think it's going to have an impact on our crr's, being able to go out there and and be able to talk to someone about, you know, if you want to be able to pull data from the complete employee life cycle, and if you want your employees to actually be able to leverage all this,
You know, it's really important that you have these other modules that we have. And so I also think it's going to make an impact there. And I believe win-backs, you know, we're already seeing that. I mean, we're seeing clients that were gone from us for a real short period of time come right back because of Betty.
We're gone, or some of these other things are just client service that they're like.
you know, um, and this is just changes all of that. I mean, I don't know how you go from being used to commanding a system and just telling it your problem that it solves
I don't know how you go back to navigating and trying to find out how to fix your own problem. It just seems like, uh,
You know, people don't usually go backwards in technology. They don't do that too. Well none of us even our consumer lives. None of us go backwards in technology very well.
And I think that, uh, i1 has made it easier, uh, to access all the Automation. And I, I just, uh, I think it would be very difficult, uh, for clients once they're getting full value to, uh, you know, want to have less.
Okay, that's helpful. And then can can you talk about how the initial rollouts of the new offices in La? Raleigh and Providence have been going and now that feels like the the business is in a much healthier place. Should we expect a, a more regular Cadence of office, launches move forward.
Yeah, I mean, you know I don't know that.
Of a regular Cadence. Maybe they're for a while we were
In 3 or 4, uh, you know, our sales organizations doing very well right now. In fact, uh, 1 of those offices, I'll go ahead and call them out. I think it's Providence, hit a million dollars in new sales, faster than anybody's, any of our offices have ever gotten to it. So, uh, you know, they're ramping up well and again, the more successful offices. We have the more successful managers we have the more successful backfield for those managers. We have the better the opportunity. We have to open up additional markets and so that is a part of what we're doing as well as increasing the dollar volume in every territory, uh, that kind of gets us to those next levels.
Thank you.
This concludes the question and answer portion of today's call, I will now turn the call back over to Mr. Chad Richardson for closing remarks
I want to thank everyone for joining the call today. We look forward to speaking with many of you over the coming months we will be participating in several investor events. This quarter including Deutsche Bank technology conference on August 27th. In Dana Point. Then on September 3rd, we will be attending the city Global TMT conference in New York City. We will also be hosting meetings at the wolf TMT conference in San Francisco on September 10th.
With the strong results and the re recent launch of iwan. I'm even more excited about how the future is shaping up for paycom. I want to thank all of our employees, for their contributions, to our success. And with that operator, you may end the call. Thank you.
this concludes today's conference call, you may now disconnect